Promoting Social Change Through The Private Sector

– We invented Dean’s Discussions several years ago to give people an hour in the Kennedy School community a chance to talk about issues of the day And in different semesters, we’ve had some different themes The theme of the spring semester was supposed to be about different ways of achieving social change in the world We decided to pivot that and focused those discussions on the COVID pandemic, but we are back this fall to talk about different ways of achieving social change in the world We have a session coming up about achieving social change through governments, a session coming up about achieving social change through public organizing and social movements And a discussion today about promoting social change through the private sector And the overarching message should be that there are a lot of different ways that people can move societies to solve public problems And at the Kennedy School we teach and do research and engage with practitioners on this whole array of different ways We work on governments, of course, that’s the Kennedy School of Government, but we also do a lot of work on organizing and social movements And we do a lot of work on how to instill in the private sector the commitment to, to make a difference and to help guide actors in the private sector toward making a positive social difference And that’s the theme for today Let me just very briefly introduce my four terrific colleagues who will be on the panel They are in alphabetical order: Cornell Brooks Cornell Brooks is the Hauser Professor of the Practice of Nonprofit Organizations and a Professor of the Practice of Public Leadership and Social Justice He has launched a new initiative, the William Monroe Trotter Collaborative for Social Justice at the School’s Center for Public Leadership Cornell, it’s great to have you with us this morning Next in alphabetical order is Jane Nelson Jane is the Director of the Corporate Responsibility Initiative at the Kennedy School She’s worked at the UN and with a set of other international organizations and has contributed a lot for many years to our work at the Kennedy School Jane, it’s great to have you with us today Next is John Ruggie John is the Berthold Beitz Research Professor in Human Rights and International Affairs He is leading a global thinker on international relations and has been particularly focused over the last number of years on how to create standards of behavior by organizations to advance social purposes And John, it’s great to see you, and good to have you with us today And last in alphabetical order is David Wood David’s the Director of the Initiative for Responsible Investment here at the Kennedy School He’s also an Adjunct Lecturer in Public Policy And David advises a lot of people, teaches a lot of people how to use their money to advance the, advance positive changes in the world that they care about So we’re very lucky to have all four of these people Sarah Wald, who’s my Chief of Staff and is also an adjunct lecturer at the Kennedy School, and at Harvard Law School, will be monitoring as usual And Sarah, I’ll turn this over to you – Okay, thank you Doug, and thank you to all our panelists As Doug mentioned, this is the first of three Dean’s Discussions about different ways to achieve social change I think that everyone, virtually everyone who comes to the Kennedy School, either as a student or most of our staff and faculty have the goal of social change in some form, (indistinct) really in essence what is better public policy and better public leadership, other than changing society in different ways to address public problems So we’re going to use our usual format here today which we’ll hear individually from each of the four panelists And then we will open it up to questions and discussion from the audience I’ll encourage you to use your virtual hand raise when we do that But first we’re going to hear from Jane Nelson who’s going to frame for us that even within the topic of the private sector and social change there are a number of different ways that this occurs and different levers that people have So, Jane – Great, thank you, thank you, Sarah and Doug And it’s wonderful to see so many familiar faces and friends

and many new faces What I’d like to do is focus on three types of voluntary reaction that can promote social change through companies, and that go beyond what businesses legally are required to do through government policy and regulations, but hope we can then come back to government policy and regulations at the end And all three of these areas of action have been gathering momentum over the last couple of decades, but have dramatically increased I think in importance and sense of urgency in recent months as a result of the severe social and economic inequalities that have been highlighted and exacerbated by a combination of the pandemic, racial injustice in this country and elsewhere, and the increasingly negative impacts of climate change around the world, particularly on some of the poorest and most vulnerable communities And while it’s obvious that government has to take the lead in addressing these really complex social and interdependent challenges there can be no doubt that companies and especially large businesses and institution investors have a crucial role to play either as part of the problem or as part of the solution And I wanted to focus on three actions where business can be part of the solution And the first area is voluntary commitments made by companies themselves What does this mean? This is like an individual company making a public commitment to first identify and then to manage the social and environmental risks and opportunities that are sort of most relevant or most material to its own business, but also most salient to the people affected by its business, its employees, other workers, customers, suppliers, host communities, and in some companies, citizens at large And there are two key things that individual companies are doing and can do on a voluntary basis And I think first and foremost is to implement responsible business practices And this means companies setting policies, public commitments, management systems, reporting systems to ensure that they are respecting human rights first and foremost, including promoting inclusion and diversity, that they’re managing and mitigating negative environmental impacts and externalities, that they’re tackling bribery and corruption and they’re paying taxes and fair wages And we now have global norms and standards in all of those areas And Prof. Ruggie will probably speak to a few of them, but the reality is that most of them are not mandatory or legally binding on business And so there’s still a lot of reliance on business doing things on a voluntary basis And we are seeing, particularly in the EU growing disclosure requirements that the businesses having to publicly disclose their sort of responsible business practices The second area beyond responsible business practices that individual companies can do and many, several thousand are doing is to promote social change through what our colleagues, Michael Porter and Mark Kramer would describe as creating shared value And this involves investing and innovating in new technologies, new products and services, and increasingly new business models to profitably solve social and environmental challenges And so examples would be pharmaceutical companies working on improving access to essential medicines or food and beverage companies recognizing they have to take action to improve nutrition or banks and telecommunication companies supporting digital and financial inclusion or the many companies, and it’s estimated at least 1,000 companies now that are making science-based commitments and science-based targets and developing new technologies and business models to tackle climate change So there’s a lot activity happening at the level of individual companies taking voluntary action necessary but not nearly sufficient, probably several thousand companies are at the vanguard on taking their own action But the OECD estimates that there’s 41,000 publicly listed companies So we’ve got a long way to go even on publicly listed companies let alone private companies That’s the first are Very quickly, the second area is what I would call civic and investor activism And this is where institutional investors, or civil society organizations, social movements, trade unions, consumer rights organizations are either pressurizing and penalizing companies or sort of encouraging and incentivizing companies to improve their social performance And this type of activism ranges from consumer boycotts and divestment campaigns like we’re seeing in the fossil fuel industry at the moment to active engagement with companies Just very quickly, two examples of active engagement One is ranking companies based on their performance So Oxfam for example, has a Behind the Brands campaign,

which ranks food companies on their social and environmental impact There’s the Access to Medicines Index that ranks pharmaceutical companies, there’s the Bloomberg Gender Equality Index There’s the Corporate Equality Index that ranks companies on their LGBTQ performance And so we’re seeing a growing number of indices and work underway at the moment around racial equity indices as well And then the other big shift we’re seeing in engagement, and I’m sure David will talk to this is the increase in environmental social governments and impact investing from big institutional investors Assets under management have increased, I think, they’ve tripled over the last eight years And so that’s another way to sort of promote social change through investment dollars, and then through investor activism And then third and finally, is what I would call collective action and multi-stakeholder partnerships where large numbers of companies come together with sometimes large numbers of civil society organizations and sometimes government entities to try and achieve greater scale and systemic impact than any could achieve on their own, either through leveraging diverse resources establishing common norms and standards or advocating for policy reform And we’ve seen hundreds of new multi-stakeholder partnerships emerging increasingly in the last sort of eight months or so I mean, just one very quick example of a well-established one that many of you will know is Gavi, The Vaccine Alliance where you’ve got governments working with companies, with research institutes, with foundations, public donors to improve access to vaccines And over the last couple of decades, they have helped to vaccinate over 820 million children in some of the world’s poorest countries and are playing a key role in making sure that once we have COVID-19 vaccines that there’ll be more equitable distribution of them And that’s just one of many examples and hopefully we can come into others in the discussion But I think to close the sort of three areas of voluntary commitments by companies, by individual companies themselves, civic and investor activism to pressurize or incentivize companies, and then collective action and multi-stakeholder partnerships, all three of them are needed simultaneously, they’re all essential, but I would conclude by saying they’re not nearly enough, and that if we really want to scale, impact and get many more companies improving their social performance then public policy and regulatory reform is going to be crucial And I hope we can dive into that Thanks Sarah – Thank you Jane, that’s very helpful I’m feeling that now each of the other panels is going to dive a little deeper into different, some of the areas that Jane mentioned Next is John Ruggie who’s going to talk about his work and some of the needs for robust voluntary standards – Thanks very much And so nice to see so many of you interested in this subject which is an absolutely critical subject Without business, without the active participation of business there are not many global problems that we can deal with effectively, let alone solve And so that’s been a challenge for us for some years now Jane and I go back a long way, but we both entered the scene in the 1990s And some of you may remember, others of you will have read that that was sort of the decade of hyperglobalization as Danny Roderick likes to call it deregulation, outsourcing, offshoring, financialization, et cetera, et cetera In other words, the idea that you could regulate business through traditional instruments was just unrealistic It wasn’t going to happen In the decade from 1990 to 2000 94% of all national legislation in the world that addressed foreign direct investment encouraged it, facilitated it, attracted it Okay, so that was sort of the context in which Jane and I sort of entered the picture, and we entered from slightly different places, but lots of overlap Jane actually started in the private sector I happened to be working for Kofi Annan at the UN And we were sort of brainstorming together what The world that Jane was first sort of working in is what I sort of not jokingly, but a little sarcastically used to call homemade standards by companies

They would make up their own standards when they’re attacked by a civil society about child labor or whatever it was, or not having, not granting freedom of association and collective bargaining they’d make up their own standard And groups of companies may have collective standards in the beginning and so on and so forth But we had this idea at the UN, why not align your standards behind UN norms that address every issue that you’re trying to address? So from the Universal Declaration of Human Rights, you’ve got the, you’ve got set of human rights standards From ILO Conventions on workplace standards, you’ve got a set of readymade standards They may demand a little more of you than you’re willing to demand of yourself, but it is far more attractive because it has greater geographical appeal, it has greater legitimacy and so on and so forth Now, one lesson I’ll draw from that first experience we established something called the Global Compact, initially, in 2000 with 40 companies Today, it has 12,000 active participants, more in emerging market countries than in North America and Europe And that is I think a significant development and it’s growth, it is dependent on two things that you’re going to find I think whatever set of organizations you work with One is entrepreneurs in companies I rarely come across a company in which there aren’t people who would like the company to do better And so you, and this goes to any kinds of organizations, so you try to identify who they are and you try to start assisting them In our case it was relatively easy We’d have the secretary general who was the rockstar of international diplomacy, invite them to a meeting and pictures were taken and they were sent back to their company and all of a sudden people started paying attention You need entrepreneurs and you need disseminators Once, you’ve sort of established a set of standards, you need disseminators In our case, the disseminators were guess what? Consulting firms They all of a sudden saw an opportunity for themselves “Hey, wait a minute, there’s this new set of standards None of you really know very much about it We do, we do And we want to help you.” And so this thing kept growing In emerging market countries, companies there was signaling going on to the major global companies We want to join this thing because it will demonstrate that we know what responsible corporate conduct looks like So we’re safe as supply chain partners or joint venture partners, or what have you So that’s sort of my story, number one My story number two is a little different because the first chapter here, the Global Compact chapter didn’t seek to regulate, it sought to align standards behind some UN norms Thought it was a sort of a learning forum, sort of a forum for pure learning if you will, with not a hint of regulation, because we didn’t have the authority to do it among other things But chapter two I actually got a mandate from the Human Rights Council at the UN to conduct research and consultations, and come up with a set of standards that this intergovernmental body would endorse if they’re agreed with them And then you would have it’s not, it’s called soft law, right? It doesn’t have the binding force of law, but if you have, as I did a unanimous endorsement by the UN Human Rights Council companies are going to pay attention to it Now, here again, we needed help, obviously And the entrepreneurs were the first to come on board

because they had already had an experience that “Hey, this was improving the company’s image and it improved work retention statistics People actually wanted to work here,” et cetera, et cetera So we started with them But when you get closer to a real regulatory thing there are certain people in the world who are called lawyers and the corporate lawyers were a potential impediment to this And so I spent a good two years literally consulting with corporate lawyers and explaining to them that this is a form of risk management It’s not the transactional risk management that you do before you conduct an M&A or whatever This is human rights or social risk because human rights risks, you have the risk of your involvement in human rights Harm can come back to bite you And besides you shouldn’t be doing it in the first place And so in this case the profession that was most significant in the project turned out to be corporate lawyers who were potential adversaries but then became the strongest supporters because, hey, we do due diligence, we do compliance, we’re in-house counsel, which is what we do And of course there was a little negotiation going on here and there, and there’s some things they didn’t want, and we worked it out But and then the spreaders in this case, people were beginning by, sort of 2010, 2005, 2010 were beginning to question that overall 1990s context that I described before, saying, “Wait a minute, this isn’t good for people or planet We need to make contributions to this.” And companies became deeply involved, major companies started putting out freestanding human rights reports in 2015 In 2016, in the middle of the corruption problem at FIFA, the football governing body or soccer, we call it the United States for some reason I got a call from them and said, “We’ve got this real, real problem in Qatar We gave them the next World Cup and we didn’t realize that they were using forced labor or bonded labor and so on and so forth You need to help us develop a policy that we can then present to the Qatari government and get rid of this system, this labor law that they have It happened And FIFA ended up including human rights criteria in the future bidding requirements for the world cup So that’s not bad because it spreads it out into the much broader culture And finally, in the last little while and I know that David will talk about that so I won’t mention it very much but it has to do with ESG investing Investing that takes environmental, social, and governance criteria into account And so a couple of things, it was a, well, I guess to be blunt a niche product of until the meltdown in 2008 And if you look at a graph, it sort of, it gradually incrementally increased a bit of it every year And then after 2008, it shot up like a hockey stick So just imagine the hockey stick, that’s ESG investing And it now accounts for 35% or so of all assets under management globally Now I noticed when I started looking into this that everybody had really good criteria for, or semi-good criteria for the environmental factors governance factors were so, so, but the S was awful And it’s occurred to me that just about every S factor was a human rights related factor And so I had a pedagogical exercise to do all over again

to try to talk to the investment community about human rights, and talk about a challenge And that’s what I’m sort of currently working on now trying to make standard setters to recognize what the S is Now one final remark, and I’m sorry, I’ve gone on so long Jane mentioned about how voluntary standards identify or attract the leaders in any industry And some industries come to, some industry leaders come to a point and say, “Wait a minute, we are now so far out front of everybody else, we’re going to suffer financial disadvantages if we don’t bring these guys along.” And we are now in a place, particularly with the European community I’m working with on this issue, of not only mandatory reporting requirements, nonfinancial reporting requirements but adopting a core concept from the UN Guiding Principles human rights due diligence, and making it mandatory with accountability mechanisms attached, including liability in certain cases So we’ve moved from the most voluntary in the most inhospitable environment to a time when that work now translates into hard law in certain places in the world of the European union above all – Thank you John, that’s a great segue into David’s telling us more about the tool of investment And David you’re on mute, I don’t know if you – Yeah, it’s probably best if I’m not talking, that you all don’t hear my dog, my child, (laughs) Though, they’re all very interesting So thanks I’m going to try not to repeat what Jane and John said too much but it’s very aligned with the way I see the field of responsible investment And particularly my work at the IRI is focused on the S and ESG, and it’s been so great to have John’s voice in that discussion, it’s really important And the way the field developed over, since the financial crisis, social issues really were marginalized in favor of environmental issues for a variety of reasons we can talk about But I wrote down my comments ’cause I found that Zoom even seven months in, makes me nervous And I was furiously trying to plug in responses to Jane and John at the same time, so when it sounds really awkward it’s because I failed, but I’ll just say something real quick So at the broadest level, I study efforts by investors to improve the social utility of finance That’s sort of the covering term that we say, but in practice, that means a lot of different things and a lot of different kinds of investors There’re investors trying to align their investments with their ethical commitments I think that’s where the field came from, super important There’re investors trying to bring their actions in line with established norms, as John just talked about, the SDGs have become a reference point for investors largely out of the U.S The guiding principles on business and human rights have become the way that investors talk about human rights, right? So there’s these outside norms and you can align your actions with them There are investors who use ESG information to make better longterm investment decisions, and they believe that over time those long term investment decisions will yield better returns but that’ll align with better social outcomes And then we have mission driven investors, they call themselves impact investors sometimes who are looking for investments with outside social benefits Then there’s the world outside of investors trying to shape investments or policymakers trying to shape markets, activists trying to influence how investors behave, all of these sort of focus on questions about how to rethink how investors act But also from my perspective, how investors integrate social I’ll just call them social issues but environmental and social issues What it means to take those issues and bring them in and make them part of investor logic And as both Jane and John have said, the field’s grown tremendously We started the IRI in 2002 when it seemed like the field was huge by comparison from 1991, and it was this tiny little backwater And really since 2009, the notional money that cares has grown just immensely But what I thought I’d do now is just give two examples of that raised questions of how investors are embedded in larger social movements or efforts So less about how investors sort of make their investments and how they, then how they participate in society

that come out of IRI’s work First, the Just Transition in South Africa So we’ve been working on a project on investing in a just transition So how do investors integrate community and labor considerations into their climate-related investment strategies? And South Africa, as it turns out is one of the few places in the world where there’s a really lively conversation about what a just transition looks like I think the topic is everywhere felt, or A Green New Deal or that sort of thing, but in South Africa it’s just very intense because South Africa has a lot of coal workers still Not many people have a lot of coworkers still The country it’s, largely just faces a immense transition risk in decarbonization And there’s a tripartite structure between business, labor and government to hash out the issue of how to fairly decarbonize It started with a state-owned energy utility The question is where do investors fit in all of this, right? And how do they participate in a discussion where there’s no clear role yet, like business labor government the investors are sort of tucked into business, but a lot of the discussion in South Africa is how do we bring money into clean energy and how do we handle the disinvestment that’s going to happen from communities, where we bring investment into communities that are going to be negatively affected by the transition And I bring it up, to say the discussion here is where does investor’s voice sit in South Africa’s discussion about the Just Transition, where so much of the way that the topic is addressed is about investment? But investors are seen as really something that’s pulling apart the social cohesion or investment sort of we have to adjust to investors, or we have to change the prices for them rather than how do they participate productively in the discussion I think responsible investment, that’s hard, that’s a reach for responsible investment, but it’s important for us to think about Second, private prisons So for class, we’re doing these asynchronous interviews everybody is bringing in experts, right? So I interviewed someone who I really respect, a guy named Pat Tomaino who works at Zevin Asset Management And he’s been a leader on addressing the issue of private prisons as an investment topic And I want to talk about this sort of as a general point, not so much about private prisons, we can, love to talk about the topic but how did private prisons become an investment topic? So at Zevin the client base was concerned about this for ethical reasons, right? They had a large socially minded client base who didn’t want to be invested in prisons and they called up and they asked “I don’t want to own that, I think it’s wrong.” So it was a kind of divestment campaign But from that perspective of this sort of socially minded asset manager the goal was to translate that ethical concern into investment logic And so the way that investors like Pat have gone about doing this are addressing private prisons as a question about risk management, as John said, right? Political and reputational risk, an assumption that there will be over time some social reckoning with the way that we manage the prison industrial complex, and investors will be implicated But what that meant in practice is for most of these investors, they didn’t own private prison companies What they did own are banks who were funding them And the way that investors could gain influence is to create a larger coalition of investors not just the socially minded ones, but the larger ones for whom risk management was a convincing argument to come together, to engage with banks who were lending to these companies Because if the socially minded investors didn’t own the banks, they did own, I mean, it didn’t own the prison physically, they did own the banks in their stock portfolios And for me it’s an important issue intrinsically but it also really illustrates this tricky line where the field of responsible investment is negotiating between these ethical concerns that bring people to the table and the financial logics that make it tractable for investors to engage And I think that’s an important topic So I guess my general point is that responsible investment as a field is a way to think about investors as social actors Sometimes we think of it just about like how you make investment decisions or how do you find good companies or good funds but there’s a much broader picture to think about as well The next frontiers for the field are how investors tackle systemic issues where any individual investment decision might lead them down a path they don’t want to go but systemically you have to approach issues I’ve been thinking a lot about economic inequality as an investment topic But also as both Jane and John pointed out how ESG information and standards

kind of ladder up to good public policy and serve as a complement rather than a substitute as they sometimes are framed narrowly in the field And I think the Kennedy School is a great place to think about that – Thank you, David Our final panelist is Cornell Brooks who’s going to pivot to another part of the private sector I mean, we tend to think of large corporate interests but the private sector involves a lot of others, including individual professionals So Cornell’s going to talk about that and you’re on mute, Cornell – Well, first of all, let me just say good morning to everyone and to thank Doug, Sarah, co-panelists and all of you for making time for this I think critically important discussion at a critically important time So our conversation today is about the role of the private sector in terms of social change And I want to be specific, the private sector in terms of social justice And so when we think about the private sector in terms of social justice we think about private actors, and as David lifted up social actors But we cannot think about private actors, social actors in terms of professions So when I look across this virtual room and consider the constellation of professions, backgrounds, disciplines, perspectives we have to think about the ways in which we can all be engaged and involved in social justice as professionals and as professions and professionals And so by way of example I’d like for us to think about Americans, America’s pediatricians, that’s to say the doctors who attend to children The healthcare professionals who attend to children, the nurses who attend to children And the reason I lift up this particular profession is before George Floyd, and a minimum of 27 million Americans who engaged in protests across 550 jurisdictions in the country, there was a little boy by the name of Tamir Rice, 12 years old, who was shot by a police officer on a playground because he was holding a toy gun And the police officer assessed his dangerousness if you will in under two minutes And before Tamir Rice, there was of course, Emmett Till back in 1955 These tragedies, these police, I used to say, one instance a police homicide and the other, a homicide at the hands of racists We consider these tragedies involving children in terms of the immediate victim But in this moment, I want us to think about the fact that America’s doctors who attend children have to consider the immediate victim, that is to say a child dying at the hands of the police and gun violence, but also the children beyond the patient in front of them, the children beyond the homicide in front of you And so I want to lift up here three policy goals for patients as a whole, that being hippocratic policing That is to say focusing on a form of policing that does no harm, that changes the legal standards such that they don’t put an accent on the preservation of the officer’s life to the exclusion of children or civilians Two, re-imagining policing in this moment And then third disrupting the school to prison pipeline But if we talk about re-imagining policing in this moment, it also means us re-imagining our professions So in the case of pediatricians, they consider the children who are before them their patients, but when they look beyond their patients to the children behind their patients, in the case of Tamir Rice, the children who attended school with him, who heard about his death And when we consider the research of our colleague, Desmond Ang who has demonstrated pretty clearly that when children read and see and hear about police homicides, they are affected, that is to say their grades decrease, school attendance decreases, emotional disturbances increase and college attendance decreases So in other words, there’s an effect, there’s an impact on children beyond the child immediately in front of you That is to say the children beyond the patients immediately in your care So when we think about this profession, that is to say pediatricians They enjoy a special level of trust among the most trusted professionals in the country as physicians, as nurses

A higher level of trust, the nurses, a high level of trust, not nurses A high level of trust, the members of Congress, members of the media, members of the clergy And so with this trust, they have a special form of capital And so with this capital, they are in a position as are many of us to think about social justice as a profession, that is to say leveraging the capital of our respective professions So in the case of pediatricians since they enjoy this level of trust and have the responsibility of diagnosing and engaging in prognosis and prescribing courses of treatment, they are also in a position to engage in yes, healing, yes, storytelling and justice making How so? Doctors frequently put together interdisciplinary, inter-specialty panels, they’re called grand rounds And as such, they diagnose, they assess the prognosis of a patient from multiple perspectives, and then they prescribe a course of treatment In the case of policing in this country, this particular profession is in a position to provide a prognosis and a diagnosis to the country by gathering their professions, and as a profession and lifting up a course of treatment How do we know that this works? If we think about the neuroscience, this essentially says, what you as parents and grandparents know intuitively, the children are not like adults That is to say their brains are not fully formed, and do not possess the impulse control, do not possess the ability to discern consequences in the same way that adults do That neuroscience are research in the hands of social scientists, in the hands of pediatricians placed inside of a brief that went before, a series of briefs that went before the Supreme Court, led to the constitutional abolition of the death penalty, the constitutional abolition of life without parole for children So we have to tremendous seismic, tectonic shift in the law as a consequence of physicians, pediatricians, social scientists, neuroscientists telling a story from their profession in the courts, in legislatures, transforming juvenile justice Pediatricians in this moment had the ability to tell a story for the country in a way that can lead to a hippocratic form of policing As I say, a form of policing that does no harm So yes, the civilians before you who are in the position of perhaps becoming homicides or homicide victims or hashtags, but also children who may well be traumatized, shifting the narrative with respect to the school to prison pipeline, and re-imagining policing Last point here is what is true for pediatricians is also true for a variety of professions Literally everyone in this room, wherever you are, whatever it is that you do, re-imagining what, reconceding what you do, puts you in a position to leverage the analytic capital of your particular profession, your particular specialty, your experience in ways that can bring about social justice outcomes How do we know this? Last point here If we think about a young pediatrician in Flint, Michigan okay? Mona Hanna-Attisha who saw the patients before her suffering from lead poisoning and who then went on to conduct a bit of research that literally transformed or changed the trajectory of children in Flint This is the case with lawyers This is the case with doctors This is the case for teachers It is the case with all of our professions, which is to say, we have the capacity, we have the will, we have the means to use advocacy principles that we teach at the Kennedy School, and certainly that I teach, to take what it is that we do every day to make someone else’s day and tomorrow, better, different, more just So with that said, I’ll close – Thank you, Cornell Okay, we’re going to open it up for questions now, as I said, please use the virtual hand raise And just a reminder that a good question at the Kennedy School involves identifying yourself, asking only one question, not follow up discussions, directing your question to one of the panelists, although others may chime in, and it ends with a question mark So, questions See, unlike Doug, I might call on people. (laughs)

Why don’t I start out with one question that you raised Jane and John, you picked up on and it’s obviously relevant to the others too, which is the notion of you all talked about examples of good actors or actors in good faith in some way, businesses that want to at least be addressing social problems When that is not the case, when, and I don’t even want to say a bad actor but you’ve mentioned that regulation or government does need to step in at one point Where do you think are the most immediate needs for there to be regulation along this spectrum of issues? Jane, I think – Yeah, I think sort of three areas that I would focus on One is mandatory disclosure requirements on the social and environmental performance of companies So, and listen, John mentioned work that’s happening in the European Union on this You had every company over a certain size had to publicly disclose their, some of their environmental impacts but particularly what they are doing or not doing in terms of equity, social justice and inclusion, as opposed to just having voluntary ranking or investors investing in the good players I think that would shift us quite a long way And without being prescriptive about what the company has to do, just requiring that companies have to report on what they’re doing, I think is one area A second area, and there’s a lot of debate on this, I’m hearing more towards the mandatory requirements is around racial, gender and other forms of diversity and inclusion both within companies, amongst their employees but also what they’re doing with their suppliers, what they’re doing in terms of communities And so at a minimum I think starting to require reporting on that, but do we also need to get investors and policymakers aligning around companies needing to meet certain quotas and that’s a very controversial area, but we’re just not making the progress that the companies could be and should be making on that front And then thirdly is, and David’s already picked on a just transition and companies I think increasingly need to be required to set targets and preferably science-based targets on their climate impact, their environmental impacts but also to be able to provide a narrative on the equity issues, job creation, job loss issues associated with transition and what a just transition looks like So, those would be sort of three areas where I think sort of policies and regulation particularly around disclosure could make a difference And then I would also like to add a very quick thing Cornell, I loved your framing of pediatricians as justice seekers, and I think something that the rest of us didn’t pick up is chief executive offices need to be, of big companies and other executives, all of us as professionals as you say, but leaders in business I think there is more and more expectation that as individuals and as citizens that they got to stand up more, preferably obviously with support from their boards of directors around some of these crucial social justice issues that we’re we’ve got to address collectively – Okay, we have several audience questions The first one is Martin Lugenbull Martin – Thank you And thank you for that insightful session I would think my question is probably addressed to Professor Ruggie So I’m a mid-career student at the Kennedy School And prior to that I was managing a partnership around the UN SDGs with Swiss Bank UBS And the company has been quite active, I would say over the past decade, in terms of embracing various of the principles you mentioned and various of the norms you mentioned, my question was exactly around the millennium development goals because I believe you were involved, Professor Ruggie, in having that approved by the General Assembly, which to me sounds like just a fantastic milestone, and I would love to hear a little bit about how you live this from the inside I know it’s very difficult to summarize, but I think that would be beneficial for the audience Thank you – You know, Bismarck once said that if you like sausage,

don’t watch how it’s made (chuckles) I mean, we had some very awkward debates So for example, one of the goals was, had to do with the rapid and significant reduction of HIV/AIDS And the South African government at the time was run by a president whose health minister believed that if you eat garlic, you can’t be infected And so we had a fight on our hands with the South African delegation about whether we could include in the millennium development goals this reference to aid, the reduction of treatment and therapies And so finally, we simply said, “Look, we will talk to the public We will tell the public that your government, your country which suffers more heavily from AIDS than anybody else in the world is preventing us from including this in our goals.” And that was sort of the end of the conversation I mean, we did something we weren’t supposed to do We said, “We’re going to talk to the press.” And which I bring just a very quick point as far as sorts of things that we’ve all been talking about, it relies on civil society activism, it relies on a press that is relatively unconstrained politically and so on and so forth So in this case, it was the press that or the threat to go to the press that did the trick – Great Next question is from Chris Musser – Thank you Thanks so much for the panelists, it’s fascinating My question is probably for Professor Nelson, Professor Ruggie, how would you frame the World Economic Forum’s recent? Can you guys hear me? I see some – Yeah – You broke up a little – Okay, sorry How would you frame the world economics most recent white paper with the called measuring stakeholder capitalism towards common metrics in light of what’s happening with the UN and other places? Does this fit in? Is it kind of a competing narrative? What are your kind of, what’s your take on that? – Jane, do you want me to go first or do you want to go first? – After, I’ll follow up, John – Okay So stakeholder capitalism has been introduced as sort of a macro concept particularly once the Business Roundtable in the United States last summer committed itself to serve all stakeholders not only shareholders And the British Academy put out a very similar report And so stakeholder capitalism is the, the macro concept that sort of leader organizations like the World Economic Forum and the Business Roundtable would like us to believe is around the corner I interpret the debate as, listen, we have ridden the horse of shareholder primacy for too long The cost has been high We have to get off it, but we really don’t know where we’re going Stakeholder capitalism can mean adding a bunch of non-executives to boards It can mean all sorts of things And the, the main promoters of the idea, in my judgment have not yet come up with a satisfactory answer But I’m writing a paper called Making Shareholder Capital, Making Stakeholder Capitalism Work – Wow – Jane – Looking forward to reading I think Chris, building on John’s sort of

macro framing comments, one of the challenges clearly is having widely universally agreed metrics and measures to which we can hold companies account whether we’re investors, regulators, employees, other stakeholders And clearly, as we all know one of the challenges in this field has been letting 1,000 flowers bloom and numerous initiatives Having said that we have, we’re moving towards, as I’m sure you’ll know the Sustainability Accounting Standards Board, the Global Reporting Initiative that’s continuing to strengthen its capabilities, the Task Force on Climate-related Financial Disclosures So there’s some very rigorous reporting platforms now available And so people are asking, “Well what’s this, new World Economic Forum Initiative?” Just for the benefit of everyone else on the call This is something where a group of businesses at the World Economic Forum said, “We’ve got all these measurements and metric frameworks but there’s no universally agreed one that all companies will be held accountable to in every industry, in every country.” And they felt that there was sort of something else needed Now there’s debate whether there was or there wasn’t, but I think what’s happened is in again it’s a wonderful example, regardless of what one thinks of the metrics of John’s comment earlier about disseminators in that, yeah, the World Economic Forum was able to bring together leading businesses but also the four global accounting firms And it’s one of the first times in many years, they can’t agree on tax reform, they can’t agree on a lot of things, but they agree, we’ll come together on these common environmental, social governance metrics They got them They also managed to get remarkably all of the other standard Most of the other standard setting bodies, the voluntary standard setting bodies but also the bodies that do financial accounting and reporting And by bringing that coalition together, even if and I have some questions about some of the specifics of the reporting framework they’ve now got a coalition that I think could embed that reporting framework into financial regulators, the SCC and others, where going back to a comment I made earlier companies will be required to disclose And that could be the base framework they’re required to disclose to It’s not clear if that’s the direction it’ll go in but they’re building a coalition to move in that direction So at the moment I think it’s creating a bit of confusion, but yeah, I would have visited, hope it’ll become a baseline for all companies everywhere regardless of industry, sector, but then Saxby and the UN Guiding Principles on Business and Human Rights and other GRI will continue to provide more indeed, in depth framework around particular issues or industry sectors for companies to report and to be held accountable – Thank you that’s very helpful – Thank you Cornell, I want to address this to you because one of the, I think a lot of what we’ve talked about this morning involves moving the companies to change their own practices using the companies to get broader industry standards Every time I hear you talk about your work with Ban the Box in New Jersey, I am always struck by your initial strategy of bringing in business, before in many ways you worked towards bringing in other social movements or government And I wonder if you could talk about that as business as an ally to civic organizations? – Sure, sure So thank you So quite often, when there’s a social justice challenge the temptation to circumscribe the challenge as to the effected community only They are the primary constituents They are the primary stakeholders and storytellers And quite frequently, particularly with criminal justice issues where you have people who aren’t necessarily sympathetic, you want to tell the story more broadly, define the stakeholders more broadly, and that includes business So specifically, if you think about not just the social externalities of a social justice problem people who are suffering an injustice with their business externalities, who’s suffering in terms of business that we don’t recognize? So in the case of Ban the Box that is to say people excluded from the workforce as a consequence of having a criminal conviction Well, people who have to, who are weeding out employees who are otherwise competitive are imposing a cost on themselves as a consequence of an unreasonable set of assumptions So in the case of Ban the Box we literally organized the state chamber of commerce,

the leading CEO’s, Prudential, Audible, the largest utility, the hospital systems, we had them pass their own corporate policies first, then city ordinances, then we told essentially big business and the cities, you have a patchwork of regulation here So in order to have uniformity we need a statewide law But it really involves building coalitions that are sufficiently broad Last point here going to your earlier point about bad actors So when it comes to business, quite frequently, when we narrow the context of a problem, so that we literally don’t appreciate the cost imposed, economic costs imposed on business, we unnecessarily limit the size of our coalitions and define the problem down And so we see this in the regulatory context, good example, think about prisoners who pay 10, 15, 20 times the rate that you and I pay using a cellphone to stay in touch with their loved ones So, as an example, we went to one of the world’s largest law firms, DLA Piper, had them go before the FCC to get rid of the federal surcharge that allow the families of prisoners and immigrant detainees families to pay 10, 20 times more than regular consumers And we made a business argument, which is to say this is monopolistic, anti-competitive behavior So my point being here is defining social justice problems as business problems and creating coalitions sufficiently large and using the vocabulary, the nomenclature of business and economics, not merely social justice and moral philosophy – Okay Several of you have touched on this but I’m thinking here in particular about the students in our audience, but also staff, employees, all of us John you talked about the need for entrepreneurs and disseminators Jane, you talked about the need for the CEOs to be social justice warriors But for many students graduating there are probably not going to be CEOs immediately They’re not necessarily going to be the ones making the policy So the question is what advice would you have for people in more less advanced in their careers for working on these issues in whatever organization they’re in? – Sarah, just a quick correction if I heard you correctly I was referring to, intrapreneurs not entrepreneurs – Oh, I’m sorry – Yeah – I’m sorry, okay – And we can all be intrapreneurs wherever we are at whatever stage we are – Okay – Absolutely, yeah – Jane do you – And then I think, building on that point and some of the points that Cornell also made earlier about each of us has, and the Kennedy School sort of obviously, really helping, I hope to develop professional capabilities analytical skills and capabilities, but also increasingly coalition building skills and capabilities And so I think we have every single one of our students, whether one’s going to work in business, whether you’re going to work with business, whether you’re going to campaign against business, whether you’re going to try and regulate business, you’re first of all understanding, and Cornell framed it brilliantly, both the social, the environmental justice issues and externalities, but being able to frame them as well as business and economic issues from both a language and a sort of business case perspective And then you decide on your, where a domain areas, issues that you’re most passionate about, and how do you by being a storyteller and a reframer to pick up on some of the ideas that Cornell’s picked I mean, covered, and then build coalitions around that And so even if you’re a relatively new and young employee in a large company, I’ve seen wonderful examples of, and particularly, I think, this generation not only using social media, but just generally sort of coalition building skills to build internal coalitions around whether it’s an innovative new idea or also we saw with some of the employees walking out of Google and a number of other cases where

you’re seeing employee protests beginning to emerge and for a lot of employees that’s very difficult, they’re worried about jobs, et cetera, but you’re certainly seeing more young people within companies as in both individual entrepreneurs but building coalitions around new ideas that actually get to the senior executives and the board and can drive change So, I think that combination of a professional domain expertise and then coalition building around that which is both about sort of storytelling, but the topic we’re talking about now you’re building the business case I think all of us can have, can have an impact – Great, thank you We have a question from Elizabeth Sussan – Hi, I’m Liz, I’m a fellow at the Belfer Center David you sort of touched upon this, but I wanted to sort of tease out a little bit more about the economic inequality part Obviously, we all know stock buybacks and a lack of investment in R&D and obviously a decrease in wages has affected economic inequality And as we watch a lot of companies sort of report on better supply chain but not paying a living wage is a very common thing So I’m just curious how labor and worker unions and or even co-ops impact this conversation? – Thanks So a lot of the attention to this issue comes through the intersection with organized labor and pension funds So for a variety of governance reasons you have workers on the boards of large institutional investors who are sometimes investing in things that they think are generating inequality systemically but probably look like good investments individually And the way that the board members who sort of have this attention to the labor force and to inequality try to make the issue tractable is by setting voluntary standards that go into their investment strategies So they adopt responsible contracting policies on the theory that they’re going to have better longterm returns and more stable relationships If they set off kind of for decent work standards And that’s kind of been the basis for the way that decent work has become a topic for responsible investment, but in practice, it often ends up as a policy at the level of the asset owner And it doesn’t necessarily sort of, it’s not always activated down sort of Once you get through the chain of asset manager and then, and investee the policy may not be easy, is it active or not based on whether there’s someone on the ground bringing up the information to investors and reporting on it? I’m not sure if that gets enough Liz to where you’re going but I think that’s a place where people have tried to start working through supply chains The other thing people looked for just you see all these reporting standards that Jane and John were talking about, there are lots of people working on different kinds of reporting standards across supply chains for labor on the theory that, man, if you can report on your multiple scopes of climate emissions, all the way down to your, all the way through your supply chain, you should be able to do that for labor too And there’s a lot of work going on in that, but there’s been resistance too, because labor arbitrage is a way that you can make short term profits – Okay, we have time for one final question Oketchy? – Hi, thank you My name is Oketchy, and I’m a MD MVP candidate here at Harvard and a fellow at the Center for Public Leadership So I’m a budding pediatrician so I appreciate your comment Professor Brooks on Flint and kind of a lot of the work that had to be done, that has been done there I think my question to the panelists is around community involvement in building more responsible businesses And more specifically, I think a lot of trends of what we see is we have, we find out that a business is having a very exploitive mode of operation and usually what happens, they replace the leader and usually assume that they’ll do better And I think I’m more curious about how we can get more community voices event into boardrooms, or into a lot of these decision making processes to hold businesses accountable and what that would look like going forward both here in the U.S and kind of the larger multinational corporations that have a history of exploitive practices Thank you – Jane, do you want to tackle that? – I’m happy to start in it and thanks Oketchy, I think it’s a really crucial question and a challenging one, but there’re definitely solutions And I think one of the, I want to highlight three solutions that I see here, one is, and it might require regulation,

but also voluntary standards play a role is this concept of free prior and informed consent that is developed in the oil and gas and mining sector that a company is going into a new community, need to get free prior informed consent from communities in terms of operating there And very few companies are implementing it on a voluntary basis And so finding new ways to make sure that community voices are heard when investment decisions are being made and using the model of free prior and informed consent as part of the way to go there, I think is step number one or one way The second way is sort of participatory monitoring of company impacts at the community level So if you’ve got a manufacturing plant or a mine, it’s one thing writing a nice big corporate report in your headquarters 10,000 miles away, but what you’re, what’s happening at the community level, and I know there’re some great examples where community leaders are being trained in water monitoring, waste monitoring, some of the labor sort of social justice issues and that sort of participating in assessing whether the company is managing its social and environmental externalities or not So that idea of participatory monitoring, again, one could make that more of a requirement at an operational level for companies And then thirdly, sort of voice in corporate level decision making we’re a long way off both employee voice or community voice in boardrooms I mean, we’re very, very long way off, but you are beginning to see more boards bringing in at least sort of one board director who houses their starting point environmental, social experience and justice issues And that is certainly moving in that direction as well But those are just sort of three I think of a number of areas where one can have structures that embed community participation more deeply, but very happy to pick up further with you My brother’s a pediatrician and love to chat with you further – Well, unfortunately we are out of time I want to please thank our wonderful panelists both virtually and really you can unmute in order to the clap We really appreciate your expertise and your knowledge and your examples I hope you will all join us for the next Dean’s Discussion in this series which is on achieving social change through and working with government, and that’s on November 18th So thank you all for coming and have a good rest of your day